Profit income form insurance company due to fire

[naokoktax]

Hello, everyone.

I have a client who has $100K from insurance company due to fire.

It was for his investment rental property.

He used $60K to fix the property and $40K left.

I think he has to file this gain on Schedule D.

He has passive loss for this property from previous year but he cannot deduct if he choose "not actively participate".

Does he have to choose "Active Participation" to offset this gain?

Or please give me any advice to offset this gain and passive loss.

[Mike9241]

if you are preparing returns, you should know that this is a business casualty loss. whether any portion is taxable is determined by completing Section B on form 4684.